Use Common Sense With Company Plan

YOUR MONEY - SAVINGS

I can keep working until pigs fly, but I won't get any more credits toward my pension than if I just stick around until the end of the year.

After Dec.31, my pension benefit will be frozen - along with that of all Tribune Co. employees eligible for one. Our pensions won't go up, but they won't go down either.

And at least we'll get a pension, on top of an employee stock ownership plan that began 10 years ago and continues.

``It has been kind of a bonus - you've been double-dipping,'' Mike Ryan, a Tribune benefits administrator, told employees at a meeting to explain the pension freeze. He reminded us we also have a 401(k) plan, in which the company matches part of our contributions.

Discontinuing the pension plan - new employees won't get pension benefits - is part of a national trend. Many companies no longer guarantee future retirees monthly payments for life.

``Traditional pension plans are kind of an old dog,'' Ryan said. Among more than 1,000 major U.S. companies, 79 percent still offer such ``defined benefit'' plans, but that's down from 91 percent in 1985, according to the consulting firm Hewitt Associates LLC. And nearly all of them also offer one or more ``defined contribution'' plans, including 401(k)s and stock ownership plans.

These plans shift the risk to us. We must figure out how to invest our 401(k) contributions and, in the case of stock ownership plans, we can only hope the price of our company stock goes up.

``Unfortunately, you are at the mercy of Tribune stock,'' Ryan conceded to the employees.

Nobody minded that last year. Tribune stock returned 60 percent in 1997. But what goes up can come down. The stock plummeted from $75.06 on July 15 to $44.75 on Oct.5 - a drop of more than 40 percent. It has since recovered to about $63.

That meant $63,000 of my employee stock ownership plan account value went up in smoke. Some co-workers who had also loaded up on company stock in their 401(k) plans were sitting on six-figure losses.

To put things in perspective, Tribune stock has provided returns averaging 16 percent a year since the employee stock ownership plan began. This year's drop gives us the opportunity to pick up additional shares cheaper if the price stays down through Dec.31, the next ``buy date'' in the employee stock ownership plan.

That's true also of many other companies whose stocks were punished in this summer's selloff and are still 15 percent and more off their 1998 highs.

But let's look at it positively: The unpredictable nature of the stock market should teach us a lesson that may help us in the long run, particularly if we are too dependent on the fortunes of any one stock.

An employee stock ownership plan, by definition, means buying only the company stock. But federal law allows employees who have been in a plan for 10 years to begin to diversify, putting up to 25 percent of their accounts in other investments at age 55, and up to 50 percent at age 60.

Beyond that, we need to consider whether we are compounding the problem by contributing 401(k) money into company stock.

My rule of thumb: If you already have more than 10 percent of your net worth tied to your company stock, don't buy any more than you have to. That's not lack of loyalty - it is investment common sense.